Council supports new workforce housing project in Willmar

Council supports new workforce housing project in Willmar

June 5, 2018

WILLMAR—A resolution of support from the Willmar City Council will be added to the tax credit application being submitted to the state by the Southwest Minnesota Housing Partnership. The group hopes to construct a 72-unit multi-family housing project on the north side of Willmar, near the MinnWest Technology Campus.

The council passed the resolution at Monday’s council meeting, after hearing a presentation on the project during the work session. The resolution passed 5 to 1, with Councilor Ron Christianson voting against. Councilors Fernando Alvarado and Shawn Mueske were absent.

The proposed $9.2 million project tawould be located on Lakeland Drive, and built in two stages. The first phase would see the construction of two, 24-unit buildings, with a third 24-unit building following in the second phase. The buildings are to be three-story wood frame structures with surface parking for tenants. The project would also include a playground, picnic area, green space and landscaping.

“As with all tax credit projects, the state raises the bar for all the work we do, it is high quality and design,” said James Arentson, housing partnership architect. “Durability, high quality, long-lasting materials and finishes will be a part of this project as well.”

The unit rents would be based on the incomes of the renters. Units will be available to those making no more than 80 percent of the area’s median income. There would also be four units set aside for those suffering from long-term homelessness.

A change in the tax law has allowed housing projects funded with tax credits to be rented to those on the higher end of the income levels.

“One of the things we like to do is provide housing for workforce incomes,” Arentson said.

The vast majority of the project, approximately $7.7 million, will be funded by tax credit equity, if approved by the Minnesota Housing Finance Agency. The application is due by mid-June.

“That type of equity allows us to do a project like this at a level of quality the state expects,” said Arentson.

The housing project will be asking for a tax increment financing district from the city, for a total of $315,000, to also help fund the project. Funds would also be coming from Minnesota Housing Finance Agency and the Southwest Minnesota Housing Partnership.

The total $9.1 million will be used for construction, land acquisition, professional fees, developer fees, financing costs and a reserve fund.

Aaron Backman, Kandiyohi County and City of Willmar Economic Development Commission director, was on hand to give some housing and job market information. Willmar’s rental housing vacancy rate sits at a very low 2.8 percent, he said. The unemployment rate in Willmar is also a low 2.8 percent.

“We have a tight labor market, we have people commuting in, we have housing needs,” Backman said.

The lone dissenting vote of the resolution, Christianson, raised concerns about approving another income-based housing project in Willmar.

“How much do we need, or want in Willmar?” Christianson asked. “We are being squeezed here with lower median income workers.”

He also had an issue with the fees attached to the project, including the $425,000 developer’s fee and $474,221 in professional fees, as well as the cost per unit, around $109,000.

“The costs are always higher when there is government money involved,” Christianson said. “I think these costs are exorbitant.”

However, the majority of the council supports the project.

“I think this is a great project and is needed,” Councilor Kathy Schwantes said. “It is a very laid out and thought out plan.”